IRDA wants to reduce the cost of policy buyers. The move may complicate things further for insurance agents.
After IRDA’s latest move to nudge private insurers to reduce commissions on lower premium-paying term products, insurance agents are likely to find the going tougher for them at a time.
“IRDA has informed us that we need to reduce commissions. Already a lot of advisors have left the industry and the latest move may lead to more advisors looking for greener pastures,” says a CEO of an insurance firm on the condition of anonymity.
Evidently, agents are not happy about IRDA’s proposal. “We haven’t been informed by insurance firms on this development yet but if it happens then it will lead to more insurance agents leaving the industry,” says Pradip Joshi, a Kolkata based financial advisor.
The rationale behind IRDA’s proposal is to reduce the cost of policy buyers. Traditional policies pay premium as per the premium paying term of a product. A higher term paying policy earns more income for distributors.